On 16 January 2023, the Royal Decree regarding the basic banking service for businesses was published in the Belgian Official Gazette. This Decree establishes the "Basic Banking Services Chamber" which will examine applications from businesses wishing to benefit from the basic banking service and designate a bank that is obliged to provide such service. With the creation of the Chamber, the basic banking service for businesses is now almost operational with the Ministry of Economy expected to finalise the appointment of the members of the Chamber in the coming weeks.
The pressure on the banking sector to tighten measures designed to prevent money laundering and terrorist financing has grown considerably in recent years. In particular, banks are obliged to identify their customers and assign each one a money-laundering risk rating based on various factors (type of client, sector of activity, geographic area, etc.). The higher the customer's risk rating, the more vigilant the bank must be in its regard.
This heightened duty of vigilance and the corresponding concern of being fined for shortcomings in internal anti-money laundering systems explain the growing reluctance of banks to accept or retain customers active in sectors traditionally considered by the financial authorities to involve a high risk of money laundering (such as casinos, restaurants and cafés, diamond dealers, football clubs, etc.).
It is therefore increasingly common for certain businesses to find themselves unable to open or keep a bank account, despite this being indispensable for the conduct of their activities (for example, in order to issue invoices and pay wages, suppliers and tax).
Current state of play
The right to a basic banking service for businesses was introduced by the Act of 8 November 2020. Broadly speaking, the basic banking service guarantees that any business established in Belgium whose request to open an account has been refused by at least three banks can benefit from minimum banking services, allowing it to open a current account, make cash deposits and withdrawals and carry out payments (transfers, card payments and standing orders). This service shows similarities to (but also fundamental differences with) the basic banking service for consumers that has been in place for many years now.
Lack of enthusiasm in the banking sector
Needless to say, the possibility of being obliged to provide services to customers that have been refused on multiple occasions (which undoubtedly renders them less attractive) has not gone down well with banks. It is indeed difficult to reconcile the duty of care incumbent on banks when deciding whether to accept or reject a new customer with such an obligation.
Another reason for the banking sector's lack of enthusiasm is that the new system interferes with the freedom of bankers to accept or reject customers. Under Belgian banking law, it is in fact generally accepted that banks have broad discretionary authority, subject to certain conditions, when it comes to their choice of clientele.
Summary of the procedure
Only businesses established in Belgium can benefit from the basic banking service. Banks can only refuse to provide such service under specific conditions (e.g. AML-compliance reasons or when the business already has an account in Belgium or another EU Member State). A business whose request to open an account has been refused by at least three banks can apply for the basic banking service and submit an application to the Basic Banking Services Chamber. The business will need to provide certain KYC information to the Chamber which will also request an opinion from the Belgian CTIF-CFI. Once approval has been granted (or after 60 days if no response has been received), the Chamber will designate a bank from the list of Belgian systemically important institutions that will be obliged to provide the basic banking service to the business. The selected institution must start providing the basic banking service within 10 days of its designation. Additional requirements apply to certain regulated activities (e.g. diamond dealers).
Refusal or termination
The designated bank retains the right to refuse or terminate the provision of basic banking services under certain circumstances, for example, if the managers of the business are convicted of embezzlement or fraudulent bankruptcy or if the refusal or termination is warranted by AML legislation.
Pierre De Pauw | Brussels | +32 499 69 84 72 |
Karel De Smet | Brussels | +32 499 69 84 28